Introduction
Income tax return filing is an essential aspect of the financial landscape in India. Where taxpayers are required to report their income and tax liabilities to the Income Tax Department. The process of filing tax returns has evolved significantly with the advent of technology. Now taxpayers have the convenience of utilizing the E-filing portal provided by the Income Tax Department. Income tax returns encompass a wide range of income sources, including income from the business, salary income, income from house property, and agricultural income, among others. Each taxpayer must disclose their income nature in accordance with the applicable income tax slabs and rates.
The E-filing portal enables taxpayers to file their returns electronically, providing a convenient and secure mode of filing. To ensure accuracy and compliance, taxpayers must furnish relevant documents such as bank statements, details of exempt income, capital gains, and the deduction of Rs from their taxable income.
The Process
For individual taxpayers, the process of filing tax returns involves declaring income from salary, rental income, consultancy income, or any income above Rs 2.5 lakh. Additionally, income tax returns also cater to foreign income, foreign investment income, and income from various assets and sources. The Income Tax Department provides various verification options to complete the filing process successfully. Taxpayers can choose between electronic mode verification or even opt for the physical ITR-V (Income Tax Return Verification) form, depending on their preference and convenience. While filing returns, taxpayers must also be mindful of their tax obligations and any applicable tax deductions, credits, or benefits they may be eligible for, including health insurance premiums or COVID-19-related benefits.
Taxpayers can claim refunds for excess tax payments made throughout the year through direct deposit or bearer cheques. Properly computing the tax payable is essential to remain compliant with the tax regime. The income tax computation takes into account various factors such as the type of taxpayer, their residential status, and the nature of income. For business consulting or consultancy income, consultants must declare their earnings accurately and be aware of any concessional tax rates applicable to their income level.
Filing Returns
Filing returns on time is crucial to avoid penalties and receive relief from any additional tax liabilities. Taxpayers should aim to maintain a steady record of filing returns within the specified dates for taxes, ensuring a smooth process for future financial dealings. The Income Tax return process in India is comprehensive and requires taxpayers to provide detailed information about their income and financial affairs. With the help of the E-filing portal and proper guidance from tax advisors or financial experts, taxpayers can navigate the process smoothly, ensuring compliance and availing benefits within the ambit of the law.
What is an Income Tax Return?
The Indian Government is pivotal in formulating and implementing income tax laws. These laws encompass a wide range of taxpayers, including individuals, Hindu Undivided Families (HUFs), companies, firms, Limited Liability Partnerships (LLPs), associations of persons, bodies of individuals, local authorities, and other artificial juridical persons.
One of the critical aspects of these income tax laws is the imposition of tax on the taxable income of individuals and entities. The government determines the rates and structures of taxation based on various factors and considerations. Additionally, their residential status influences the tax levy on an individual or entity. The Indian Government’s involvement in framing and implementing income tax laws aims to ensure a fair and effective taxation system contributing to the country’s revenue and economic development.
Filing an income tax return is a legal obligation for individuals and businesses who earn income during a financial year. It helps the Income Tax Department determine the taxpayer’s tax liability based on their income.
If the tax return shows that excess tax has been paid during the year, the taxpayer becomes eligible for an income tax refund. This means the taxpayer will receive the extra tax they paid back from the Income Tax Department. It is important to note that tax returns must be filed within a specified deadline. Failing to meet the deadline can result in penalties or additional charges imposed by the tax authorities.
Is it mandatory to file ITR?
According to the laws in India, it is compulsory to file income tax returns if income is more than the basic exemption limit. The income tax rate is pre-decided for taxpayers according to the latest tax policies of the government. A delay in filing returns will attract late filing fees and hamper the chances of getting a loan or a visa for travel purposes.
Who Should File Income Tax Return?
The Income Tax Act mandates that individuals, Hindu Undivided Families (HUFs), companies, firms, and other entities file an income tax return if their income exceeds the prescribed threshold limits.
Here’s a brief overview of who should file an income tax return in India:-
Individuals
Individuals with a total income exceeding the basic exemption limit before considering deductions, such as exemptions and deductions under different sections of the Income Tax Act, must file an income tax return. The government determines the exemption limit and tax slabs, and these may change annually in the budget.
HUFs
Hindu Undivided Families (HUFs) with an income exceeding the basic exemption limit are also required to file an income tax return.
Companies
All companies, regardless of whether they have made profits or incurred losses, must file an income tax return.
Firms
Partnership firms, including Limited Liability Partnerships (LLPs), must file an income tax return.
Other entities
Other entities such as trusts, associations, local authorities, and artificial juridical persons are also required to file an income tax return based on their income.
It’s important to note that even if an individual’s income falls below the tax return threshold, they may still choose to file a return voluntarily. This can be beneficial in situations where they want to claim refunds or if they are required to furnish the return as per specific provisions of the Income Tax Act. The particular rules and regulations regarding income tax return filing in India can be complex, and it is advisable to consult with a tax professional or refer to the official website of the Income Tax Department for the most accurate and up-to-date information.
Documentation involved in Filing of Income Tax Return
A comprehensive list of relevant documents that individuals may need to have handy before starting the e-filing process for income tax returns in India, and the documents which are crucial for accurately reporting once income, deductions, and tax liabilities are as follows:-
Bank and post office savings account passbook:
These documents can be used to report interest income earned from these accounts.
Public Provident Fund (PPF) account passbook:
This is necessary to report contributions made to the PPF account and claim deductions under Section 80C.
Salary slips:
These provide details of your salary, allowances, deductions, and taxes withheld by your employer.
Aadhaar Card and PAN Card:
These are essential identification documents required for income tax return filing.
Form-16:
This is a TDS (Tax Deducted at Source) certificate issued by your employer, providing details of the salary paid and the TDS deducted.
Interest certificates from banks and post offices:
These certificates are necessary to report interest income earned on fixed deposits, recurring deposits, or savings accounts.
Form-16A:
This is required if TDS is deducted on payments other than salaries, such as interest income beyond specified limits.
Form-16B:
This form is needed if you have sold a property, as it shows the TDS deducted from the payment made to you.
Form-16C:
This form applies if you receive rent and your tenant deducts TDS.
Form 26AS:
This consolidated annual tax statement provides information about taxes deposited against your PAN, including TDS deducted by employers, banks, and other organizations, as well as advance taxes and self-assessment taxes paid by you.
Tax-saving investment proofs:
These include documents such as receipts or certificates for investments made under various sections, such as Section 80C (e.g., life insurance premiums, EPF contributions, etc.).
Proofs for deductions under Section 80D to 80U:
These may include documents for health insurance premiums, medical expenditure, education loan interest, etc.
Home loan statement:
This statement from the bank is necessary to claim deductions for home loan interest under Section 24(b) and principal repayment under Section 80C.
Having these documents organised and ready can simplify the e-filing process and ensure accurate reporting of income and deductions. It’s always advisable to consult with a tax professional or refer to the official website of the Income Tax Department for specific guidelines and any updates regarding document requirements.
Types of ITR Forms
In India, the Income Tax Department has designed different types of Income Tax Return (ITR) forms to cater to different categories of taxpayers based on their income sources, nature of income, and other criteria. Here are the different types of ITR forms applicable to individuals:
ITR-1 (Sahaj)
This form is for individuals with income from salary/pension, one house property, and other sources (excluding winnings from lottery and horse races). It applies to individuals with a total income of up to ₹50 lakhs.
ITR-2
This form is for individuals and Hindu Undivided Families (HUFs) not having income from profits and gains of business or profession.
ITR-3
This form is for individuals and HUFs having income from business or profession.
ITR-4 (Sugam)
This form is for individuals, HUFs, and firms (other than LLP) having presumptive income from business or profession. It is applicable with total revenue of up to ₹50 lakhs and income from business and profession, computed under sections 44AD, 44ADA, or 44AE.
ITR-5
This form is for entities other than individuals, HUFs, companies, and persons filing ITR-7. It includes firms, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Body of Individuals (BOIs), and Artificial Juridical Persons (AJP).
ITR-6
This form is for companies other than those claiming exemption under Section 11 (income from property held for charitable or religious purposes).
ITR-7
This form is for persons, including companies, who must furnish a return under specific provisions of the Income Tax Act, such as trusts, political parties, colleges, and universities. The said specific provisions are as follows:-
139(4A)- Income of Charitable and Religious Trusts
139(4B)- Political Parties
139(4C)- Scientific Research Institutions
139(4D)- University, College, or other institutions
It’s important to note that the ITR forms and their applicability may change yearly. Therefore, it is recommended to refer to the official website of the Income Tax Department or consult a tax professional to determine the correct and updated ITR form applicable to your specific income and taxpayer category. For online advice regarding ITR, don’t hesitate to contact Legal251 on toll-free no.- (+91) 77728-77729 or download the Legal251 mobile app now.
Benefits of e-filing of ITR
E-filing of Income Tax returns (ITR) offers several benefits compared to traditional paper filing. Here are some of the critical benefits of e-filing ITR:
Convenience
E-filing can be done from the comfort of your home or office, eliminating the need to visit the Income Tax Department’s offices or stand in long queues.
Faster Processing
E-filing expedites the processing of your tax return. The Income Tax Department processes e-filed returns faster than paper returns, resulting in quicker refunds or communication about any discrepancies.
Accuracy
E-filing reduces the chances of manual errors because online platforms often have built-in validation checks to ensure the correctness of the data entered.
Accessibility of Records
After e-filing, taxpayers receive an acknowledgment and an electronic copy of the filed return. This makes it easier to access and store tax-related records for future reference.
Extended Deadline
In certain instances, tax authorities may extend the e-filing deadline beyond the regular paper filing deadline, granting taxpayers additional time to submit their returns.
Secure Transactions
E-filing platforms use encryption and secure authentication methods, ensuring the confidentiality and security of your personal and financial information.
Online Calculators
E-filing portals often offer tax calculators and automated tools to help taxpayers compute their tax liabilities accurately.
Digital Signature
E-filing allows taxpayers to sign their returns electronically using a digital signature, a secure and legally valid authentication method.
Pre-filled Data
In some instances, e-filing portals can fetch and pre-fill data from other sources (Form 26AS, pre-filled XML) to make filing more convenient and efficient.
Instant Receipt and Status
E-filing provides an instant acknowledgment of the filed return and real-time status updates, allowing taxpayers to track their recovery progress.
Accessibility from Anywhere
Those residing in different parts of the country can conveniently access e-filing platforms from any location with an internet connection.
Environmentally Friendly
E-filing reduces paper use, contributing to environmental conservation efforts.
Conclusion
To conclude, taxpayers have an essential obligation to file income tax returns, and they can conveniently complete the process through the income tax e-filing portal. Income tax returns encompass various sources of income, such as salary income, income from business, rental income, and consultancy income. Taxpayers must accurately report their income from different sources and provide relevant documents and details, including bank account information and co-owner details for house property. The income tax return serves as a declaration of one’s income, enabling the income tax department to assess the tax liability based on the applicable tax rates and income tax slabs. Tax deductions, such as standard deductions, can help reduce taxable income. Taxpayers should be mindful of the different schedules and forms applicable to their income level and nature of income.
The income tax e-filing portal offers a step-by-step guide to facilitate the filing process, ensuring that taxpayers meet their tax obligations in a timely manner. Verification options, including electronic mode and the income tax return verification form, provide flexibility and convenience. Taxpayers must carefully compute their tax liability, taking into account exemptions, deductions, and credits, while ensuring compliance with tax regulations. Filing income tax returns on time is crucial to avoid penalties and maintain a steady record of tax compliance.
Taxpayers can also claim refunds if they have paid excess tax or are eligible for certain benefits. The income tax department, with its centralized processing center, processes returns, verifies the information, and communicates with taxpayers as needed. Throughout the tax season, taxpayers should keep track of important dates for filing returns, making tax payments, and meeting other tax obligations. Maintaining accurate records, including bank statements and relevant documents, ensures smooth tax filing and record-keeping. Tax advisors can provide guidance on estate planning, tax computations, and maximizing tax benefits.
At Last
In summary, income tax returns play a vital role in the collection of taxes and enable taxpayers to fulfill their obligations to the central government. Filing returns accurately and on time helps taxpayers avoid penalties, claim deductions, and receive refunds. The income tax e-filing website provides a user-friendly platform for taxpayers to complete the process conveniently, ensuring compliance with the tax regime and facilitating efficient tax administration.
For a hustle-free e-filling of ITR, please contact Legal251 on toll-free no.- (+91) 77728-77729 or download the Legal251 mobile app.
